Tesla Directors Settle Shareholder Suit Over SolarCity’s Acquisition
Tesla’s director settled a shareholder suit over the firm’s 2016 purchase of SolarCity, leaving CEO Elon Musk as the lone defendant facing claims that Tesla paid $2.6 billion for a worthless solar power system installer.
The $60 million settlement comes as a 10-day trial is scheduled to start on March 16 in Delaware in which shareholders seek $2.6 billion in damages, which is also the total cost of the SolarCity deal.
A lawyer for Musk and a spokesperson for Tesla didn’t instantly respond to a request for comment.
Tesla shareholders have alleged Musk violated his fiduciary responsibilities, squandered Tesla’s assets, and unjustly enriched himself by pushing to purchase the money-losing SolarCity in which he was the most significant investor.
The settlement covered five current administrators: Kimbal Musk, Robyn Denholm, Antonio Gracias, Stephen Jurvetson, and Ira Ehrenpreis Brad Buss, who was a director at the time of the SolarCity acquisition, was also a part of the settlement, which was paid from insurance policies.
The case was brought to the Court of Chancery in Delaware by an individual investor and five investment funds.
The lawsuit represents another legal headache for Musk, who, in the past two years, has settled a suit by securities regulators over his use of Twitter and won a defamation trial introduced by a British cave explorer.
Musk and the Tesla board are also scheduled to defend Musk’s pay package at a trial in Delaware in 2021.
At the core of the current case are allegations that Musk and the other managerial board members didn’t fully reveal the depth of SolarCity’s problems.